Good times for property buyers as market gives more bargaining powers

A sluggish market brings good tidings for potential home buyers. One, they have ample time to decide which house they want to buy and secondly, they have a vast variety of unsold properties to choose from. Also, since there is little scope for property prices to appreciate and developers need money to continue their projects, they often come up with special offer prices for limited periods. This doesn't mean that they will not be willing to negotiate further. In fact, if a developer believes you are a serious buyer and not just a 'window-shopper' he might be inclined to offer you something extra.

So, if you hone your bargaining skills, you could get a good discount, which is difficult in a bullish market. Says Anuj Puri, chairman & country head, Jones Lang LaSalle India: "Buyers can leverage a flat market and ask for discounts on the stated price, bargain to have the one-time maintenance charge waived or ask for the parking space to be included in the price."

You could also request for more amenities to be included within the same price. "Developers may not be comfortable doling out cash discounts as it would reflect on the purchase agreement and lead to other buyers demanding similar incentives. However, they may be willing to offer incentives in kind which are not evident in the agreement, such as a gym membership or discounting the floor rise price," says Gulam Zia, national director, research and advisory services, Knight Frank India.

It's best if you research well before starting negotiations. Check how long the property has been on the market. If it's been there for more than a year, the seller may be more willing to lower his asking price. This will be true again if the seller has to make a distress sale. "In a flat market, you will always come across some sellers who are desperately trying to sell their properties for various reasons. They could be shifting to another city or country, or may be finding it difficult to repay their loans. In such cases, you may be able to finagle a better deal if you are willing to pay a larger portion of the price in cash," says Ganesh Vasudevan, VP and business head of Chennai-based realty portal IndiaProperty.com.

As the market is expected to continue to be flat for some more time, you can easily outwait a seller.

Rental returns

Generally, a slowdown in property purchases tends to indicate a higher demand for rental housing. Demand for rental properties has been growing, on an average, between 10-13% annually in various pockets of the country.

Annual rentals, which were in the range of 4-5% of the value of the property till five years ago, have now grown to 5-7.5%. "When the market is tepid, home buyers tend to wait and watch, expecting realty prices to come down in the near future. So, the demand for rental properties increases," says Zia.

However, you shouldn't rush to buy a house simply to earn a high rental income. There are various factors to be considered. "You need to be sure that the location will continue to be attractive. Rental demand tends to remain high in areas surrounding workplace hubs, where capital values are usually the highest," says Puri. You should also check for other amenities, such as schools and hospitals, and whether beneficial infrastructure projects are likely to come up soon in the vicinity of the property you want to buy.

Source : Economics Times